1. General
It was a year of challenge and a year of change. A softening economy resulted in a slowing demand for postal services. At the same time, our universal service responsibility saw the Postal Service expand its delivery network to accommodate some 1.7 million new residential and business addresses.

In light of an extremely challenging financial situation, Postal Service management and the Board of Governors acted quickly and decisively to control costs while maintaining service excellence. This included a temporary hold on more than 800 capital facility projects nationwide. At Headquarters, we instituted a hiring freeze and reduced programs. Career employment throughout the system was reduced by 11,600. And this was on top of the previous year’s reduction of 10,300 positions. USPS Total Factor Productivity for the year grew by 1.3 percent, double the planned increase. That gain translated into savings of $900 million.

Through it all, the men and women of the Postal Service delivered. For the second straight year, customer satisfaction measurements showed that 92 percent of households surveyed rated their level of satisfaction with the Postal Service as “good,” “very good,” or “excellent.” And independently measured delivery scores remained at record levels, showing that 94 percent of local First-Class Mail was delivered on time.

Service remained foremost in the Governors’ minds with their selection of John E. Potter as the 72nd Postmaster General of the United States. This brought a renewed focus on operational performance and core products and services. Potter, only the sixth career employee to lead the world’s largest postal system, established specific strategies to support continued organizational success. By developing people, managing costs, improving service, growing revenue, and realizing reform, the Postal Service can succeed long into the new century.

A restructuring of Headquarters and field operations by the new Postmaster General reduced administrative functions and better aligned resources with tasks. This included a combined Marketing and Sales function, which brought the development, management, and sales of products and services into a single, streamlined organization better able to serve our customers.

Looking forward, management began work
on a comprehensive Transformation Plan to give the Postal Service needed flexibility to finance itself and meet the challenges of expanding competition and technological change. Working with all stakeholders, management created and circulated a discussion document to assist in the development of a comprehensive plan for submission to Congress and the Administration. The three-phase plan explores changes within our existing legislative framework, moderate legislative change in areas such as pricing, and long-term transformative efforts that would define and support the role of the Postal Service in a new century.

The Postal Service’s role as provider of a fundamental service to the people of the United States was dramatically underlined following the September 11 terrorist attacks on New York and Washington. The sight of our letter carriers in every neighborhood in the nation — including the affected cities — brought a welcome sense of reassurance and normalcy to those we serve.

Within weeks of the attacks, however, the Postal Service itself became a new “ground zero.”
In an unprecedented use of the mails for bioterrorism, leaders of Congress and the news media were targeted with letters contaminated with deadly anthrax. Tragically, these criminal acts resulted in death and serious illness of innocent Americans. Two Postal Service employees were among the five Americans killed; others were made critically ill. In the uncertainty that followed, the U.S. mail was disrupted and Americans learned again the criticality, of daily, universal mail service to our nation.

The Postal Service, working with federal, state, and local public health and law enforcement officials, worked tirelessly to protect the safety of the American people, the safety of our employees, and the safety of the mail. A program of education, investigation, intervention, and prevention — notable for the involvement of the mailing community as well as Postal Service unions and management associations — was quickly developed and put in place. This helped us to address the threat to daily, universal mail service, one of the most important unifying elements of a far-flung, diverse, and free nation.

The Postal Service recognizes its responsibility in continuing to provide this fundamental service. Neither snow, nor rain, nor heat, nor gloom of night, nor the winds of change, nor a nation challenged will stay us from the swift completion of our appointed rounds. Ever.